Germany Residential Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027)

The German Residential Real Estate Market is segmented by Type (Villas and Landed Houses and Condominiums and Apartments) and Key Cities (Berlin, Hamburg, Cologne, Munich, and Rest of Germany).

Market Snapshot

Germany Residential Real Estate Market Size
Study Period: 2018-2027
Base Year: 2021
CAGR: >6.1 %
Germany Residential Real Estate Market Key Players

Need a report that reflects how COVID-19 has impacted this market and its growth?

Market Overview

The German residential real estate market is poised to register a CAGR of 6.1% during the forecast period (2022 - 2027). The residential real estate market came to a halt due to the COVID-19 pandemic, as the government implemented lockdowns and citizens were forced to stay at home.

Germany’s housing market remains vibrant amid improving economic conditions. The average price of apartments rose by 12% in the fourth quarter of 2021 compared to the same period of the previous year and denoted the largest price increase since records began in 2000. The price increase can be seen since the pandemic began. It increased by 8.25% till Q3 2021, following Y-o-Y rises of 8.38% in Q2 2021, 7.95% in Q1 2021, 8.8% in Q4 2020, and 7.38% in Q3 2020.

At the end of the first half of 2021, the transaction volume for residential properties and portfolios in the German residential investment market totaled around EUR 10.3 billion (around 57,300 dwellings and 257 transactions), with around EUR 3.9 billion of this sum changing hands in the second quarter (21,900 dwellings). The transaction volume is significantly less than in the first three months (EUR 6.4 billion; 35,900 dwellings). Nonetheless, the five-year average transaction volume between April and the end of June was exceeded by double digits (+20%), and this is also the case (albeit in single digits) when compared to the corresponding quarter of the previous year (+8%).

Scope of the Report

This report aims to provide a detailed analysis of the German residential real estate market. It covers market insights, such as market dynamics, drivers, restraints, opportunities, technological innovations, their impact, Porter's five forces analysis, and the impact of the COVID-19 pandemic. The report also provides company profiles to understand the market's competitive landscape.

The German residential real estate market is segmented by type (villas and landed houses and condominiums and apartments) and key cities (Berlin, Hamburg, Cologne, Munich, and the Rest of Germany).

Type
Villas and Landed Houses
Condominiums and Apartments
Key Cities
Berlin
Hamburg
Cologne
Munich
Rest of Germany

Report scope can be customized per your requirements. Click here.

Key Market Trends

Strong Demand and Rising Construction Activities

The demand remained strong in 2021 for the residential sector, buoyed by low-interest rates, urbanization, and healthy household finances. In recent years, the migration crisis and strong economic growth have added to the already strong demand in the country.

Despite the pandemic, residential construction activity continues to rise. In the first three quarters of 2021, dwelling permits rose by 4.8% Y-o-Y to 282,420 units, following annual growth of 2.2% in 2020, according to the Federal Statistical Office.

Consequently, foreseeable structural changes, such as demographic effects, are also perceived as important drivers of demand. Most recently, the supply side was the main obstacle to further growth. However, the political uncertainty regarding new government constellations and the high investment pressure of many market participants have tempted some portfolio holders to bring products to the market in the second half of the year.

Germany Residential Real Estate Market Trends

House Prices in Germany are Still n the Rise

A price increase of 14.5% was recorded for houses and apartments in Germany's seven largest cities: Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart, and Dusseldorf.

Prices have been skyrocketing in cities; the cost of buying a house has also been increasing in rural areas. In densely populated rural areas, the price of single and two-family houses rose by 12% in the third quarter of 2021, compared to the same period last year. The cost of condominiums in these areas increased by 12.3%. In less densely-populated rural areas, prices for single and two-family homes rose by 15.5%, while the price of condominiums rose by 11.2%.

Experts have identified several reasons why house prices continue to rise so rapidly. Over the past decade, low-interest rates, increasing demand, a lack of investment opportunities, and a strong economy have contributed to Germany's rising house prices. Construction cost has also increased significantly, with prices rising for building materials such as wood, concrete, and steel. The construction industry is facing labor shortages.

Germany Residential Real Estate Market Growth

Competitive Landscape

The German residential real estate sector has become increasingly competitive. The increasing spending on infrastructure, new government initiatives to drive investments, and new project announcements are expected to bring an overall development in the real estate sector, which may further enhance the interest of more investors. Some of the major players in Germany include Vonovia SE, Deutsche Wohnen SE, SAGA Hamburg, LEG Immobilien SE, and Consus Real Estate.

Recent Developments

  • In October 2021, German real estate investor Adler Group agreed to sell residential and commercial property worth EUR 1.49 billion (USD 1.73 billion) to LEG Immobilien to reduce debt. The sales price for the 15,350 apartments and 185 commercial units will be slightly below the property valuation, as Adler will keep a 10.1% stake for tax reasons.
  • In July 2021, the housing company Vonovia completed the construction of three apartment buildings on Wallauer Strasse in Frankfurt's Gallus. The result was 25 modern apartments ranging from 60 to 95 square meters, ideal for couples and young families. It also created 17 underground parking spaces, a car-sharing space, and storage space for bicycles. Vonovia made other 21 apartments available by expanding the top floor of the existing building.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Current Economic Scenario and Consumer Sentiment

    2. 4.2 Residential Real Estate Buying Trends - Socio-economic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for the Residential Real Estate Sector

    4. 4.4 Insights into Size of Real Estate Lending and Loan to Value Trends

    5. 4.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending

    6. 4.6 Insights into Rental Yields in the Residential Real Estate Segment

    7. 4.7 Insights into Capital Market Penetration and REIT Presence in Residential Real Estate

    8. 4.8 Insights into Affordable Housing Support Provided by Government and Public-private Partnerships

    9. 4.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)

    10. 4.10 Market Dynamics

      1. 4.10.1 Drivers

      2. 4.10.2 Restraints

      3. 4.10.3 Opportunities

      4. 4.10.4 Challenges

  5. 5. MARKET SEGMENTATION

    1. 5.1 Type

      1. 5.1.1 Villas and Landed Houses

      2. 5.1.2 Condominiums and Apartments

    2. 5.2 Key Cities

      1. 5.2.1 Berlin

      2. 5.2.2 Hamburg

      3. 5.2.3 Cologne

      4. 5.2.4 Munich

      5. 5.2.5 Rest of Germany

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Overview (Market Concentration and Major Players)

    2. 6.2 Company Profiles

      1. 6.2.1 Vonovia SE

      2. 6.2.2 Deutsche Wohnen SE

      3. 6.2.3 SAGA Siedlungs-Aktiengesellschaft Hamburg

      4. 6.2.4 LEG Immobilien SE

      5. 6.2.5 Consus Real Estate

      6. 6.2.6 Degewo

      7. 6.2.7 Vivawest

      8. 6.2.8 Residia Care Holding GmbH & Co.

      9. 6.2.9 Wohnungsbaugenossenschaft Musikwinkel eG (WBG)

      10. 6.2.10 ABG Frankfurt Holding*

    3. *List Not Exhaustive
  7. 7. FUTURE OF THE MARKET

  8. 8. APPENDIX

  9. 9. DISCLAIMER

You can also purchase parts of this report. Do you want to check out a section wise price list?

Frequently Asked Questions

The Germany Residential Real Estate Market market is studied from 2018 - 2027.

The Germany Residential Real Estate Market is growing at a CAGR of >6.1% over the next 5 years.

Vonovia SE, Deutsche Wohnen SE, SAGA Siedlungs-Aktiengesellschaft Hamburg, LEG Immobilien SE, Consus Real Estate are the major companies operating in Germany Residential Real Estate Market.

80% of our clients seek made-to-order reports. How do you want us to tailor yours?

Please enter a valid email id!

Please enter a valid message!